Strong Start of Construction Machinery Excavators and Cranes into Blue Ocean

The high-end equipment stocks in the machinery sector have always been an important hot spot for the market. This week, the traditional construction machinery sector, which was undervalued due to excellent performance, was boosted by the “Twelfth Five-Year” industrial planning policy. .

The perfect ending of 2010, a strong start to 2011 Since 2010, under the background of rapid growth in domestic fixed asset investment and real estate development, the annual sales of construction machinery have increased by more than 48% year-on-year, ranking first in the entire machinery industry.

However, the industry generally believes that under the pressure of the country's strengthening of macro-control and real estate regulation, the growth rate of the construction machinery industry in 2011 will drop significantly. It is expected that the industry growth rate will fall back to 18% to 20% this year.

"Although the growth rate has decreased, the total amount will continue to increase," said Gao Xiaochun, an analyst at China CITIC. Although the decline in the growth rate of fixed asset investment will inhibit the growth rate of sales of construction machinery, the construction of affordable housing, water conservancy, and high-speed railways will ensure that the sales volume will remain high.

Among these, the biggest difference from previous years is the investment in water conservancy construction. When the 4 trillion yuan investment in construction machinery that drastically boosted the demand for construction machinery came to an end, the national water investment policy was introduced in due course. This year, the Central Document No. 1 proposed that China will invest 4 trillion in Daxing water conservancy projects in the next 10 years. Water conservancy construction is an important market for construction machinery. This will directly boost the demand for construction machinery such as excavators, loaders, bulldozers, and cranes.

This year’s vigorous construction of affordable housing is unprecedented, and affordable housing will, to a certain extent, ease the impact of real estate regulation on the industry.

Consensus market expectations for related companies also reflect concerns about the slowdown in the growth of the industry. However, in January 2011, sales of construction machinery were good. Take the excavator as an example. January sales of Sany Heavy Industry and Liugong increased by 170% and 160% respectively year-on-year. Gao Xiaochun said, "At present, the sales data for January to February are still good, but if the sector wants to exceed expectations, we must wait for further confirmation of sales data in March."

Valuation restoration and annual report pre-increase The valuation of construction machinery is always at a relatively low level compared to machinery stocks or the entire A-share market. Compared with banks and real estate with the same low valuation, it is relatively affected by the policy. small. According to this historical pattern, the PE topline of the industry's first-line companies is more than 30 times higher and the bottom range is about 10 times. The industry valuation has an average PE of 26.8 times in the past 5 years, so its current valuation of about 20 times is already in a relatively reasonable range. , And Sany Heavy Industry, Zoomlion (000157, stock bar) and other first-line companies in 2011 is expected to PE only about 15 to 20 times, the recent rise in the plate should also belong to valuation repair prices. Shantui shares (000680, shares it), Liugong and Zoomlion have also become the top stocks for the agency this week.

In addition, the performance of engineering machinery stocks is outstanding, and the major companies’ expected increase in 2010 performance is relatively high. In the coming period of the annual report, the major companies will continue to perform.

Excavator, large-tonnage crane into "Blue Ocean"

At present, the low-end products in the construction machinery market in China, such as bulldozers and loaders, are basically in a state of overcapacity. Relatively speaking, excavators and large-tonnage cranes are favored.

Excavator is one of the most profitable products in all types of construction machinery, and is also considered to be the most growth segment in the future. From the perspective of market competition, excavator industry has a higher market concentration and foreign brands dominate the market. Among the domestic brands, Sany Heavy Industry and Liugong's excavator product lines are relatively complete and the market sales volume grows rapidly. Shanhe Smart (002097, stocks) focuses on the development of small digging markets. Among them, the excavator development of Sany Heavy Industry is particularly rapid, becoming the only domestic brand that ranks among the top five in the global sales of excavators.

For cranes, China’s self-manufactured cranes are mostly small to medium-sized tonnage cranes due to technical limitations. The development of large-tonnage cranes started relatively late and there are currently only a few leading companies such as Xugong Machinery (000425, Zoomlion), Zoomlion, and Three. A heavy industry has a certain manufacturing capacity. Xugong Machinery is the largest crane manufacturer in China, occupying about half of the domestic market share. Its products cover large, medium and small tonnage cranes, with a market share of more than 50%. At the same time, the expectation of Chenggong Group's acceptance has become the focus of market attention; The company’s crane business accounts for about 30% of the domestic market share. It is the second-largest crane manufacturer after Xugong Machinery. Its main products are concentrated on small to medium-sized tonnage models. The company’s current large-tonnage crane project has already entered the production stage. .